Key Takeaways
• US stocks lag behind global markets despite a 16.3% gain
• OECD cuts US growth forecast to 2% for 2025 and 1.7% for 2026
• Small businesses shed 120,000 jobs in November, worst since May 2020
• Consumer savings rate falls to 4%, lowest since 2022
The US Economy’s Waning Shine
President Trump has boasted of a “golden age.” Yet a new report shows the US economy is losing its edge. Stocks, bonds, and the dollar all fall short. Meanwhile, markets in other countries sprint ahead. In fact, global stocks outside the US jumped nearly twice as much last year. Thus, investors may toast champagne abroad, not at home.
How Policy Chaos Hit the US Economy
First, America’s stock market rose 16.3% last year. However, the MSCI All Country World Index excluding the US surged 29.2%. This gap is the widest since 2009, when the world recovered from the financial crisis. Likewise, US bonds underperformed, and the dollar weakened. Consequently, America’s economic premium has vanished.
Slower Growth Ahead
Next, the OECD slashed its US growth forecast. It expects just 2% growth in 2025, down from 2.4%. Then growth may slow to 1.7% in 2026. This trend worries investors and CEOs alike. Moreover, inflation expectations jumped from 2.1% to 2.7% this year. The OECD now sees 3% inflation in 2026. As a result, households face higher prices for longer.
Investor Woes
For investors, the numbers sting. A 16.3% gain feels solid. Yet it pales beside the 29.2% surge elsewhere. To put it another way, global markets almost doubled America’s growth. Therefore, anyone who invested solely in US stocks got left behind. Quick policy swings and trade tensions fed this underperformance. Thus, many seek safer bets overseas.
Business Struggles
In the corporate world, uncertainty reigns. Surveys of chief financial officers show confidence at pandemic-panic levels. One CFO said there is “just not much going on right now.” Furthermore, small employers cut 120,000 jobs in November alone. That was the worst month for job losses since May 2020. Meanwhile, 717 companies filed for bankruptcy through November, the highest count since 2010. All this points to chaos spilling over from Washington.
Household Pain
At the same time, families feel the squeeze. Consumer confidence sank to its lowest point since the pandemic began. People burn through savings faster than incomes rise. As a result, the personal savings rate fell to just 4%. That is the lowest level since inflation spiked in 2022. Consequently, many households struggle to cover basic expenses.
Fool’s Gold vs Golden Age
The Trump administration once vowed a new “Golden Age.” Yet top officials keep postponing the turnaround. Treasury and Commerce leaders first said growth would surge in 2025. Then they shifted hopes to 2026. In truth, policy chaos and mixed signals hurt more than help. Instead of real gains, Americans may have bought “Fool’s Gold.”
Why the US Economy is Suffering
Several factors drive this slump. First, erratic trade policies unsettle global partners. Second, fiscal stimulus and tax cuts boosted debt without sustainable growth. Third, rising inflation erodes consumer spending power. Finally, weak confidence keeps businesses from hiring and investing. All these issues link back to shifting policy goals in Washington.
What Comes Next
Going forward, the US needs stable policies to regain its edge. Clear goals on trade, budgets, and regulation would calm markets. Also, targeted support for small businesses could stem job losses. Ultimately, a steady hand may restore America’s economic premium. Otherwise, global peers will continue to pull ahead.
Frequently Asked Questions
How does US stock performance compare to the rest of the world?
US stocks rose 16.3% last year. Yet markets excluding the US gained 29.2%. This gap is the widest since 2009.
Why did the OECD lower its growth forecast?
The OECD pointed to rising inflation, policy uncertainty, and weaker business spending. These factors slow the pace of economic growth.
What challenges do small businesses face today?
Many struggle with higher costs, low demand, and regulatory changes. In November alone, businesses with under 50 workers cut 120,000 jobs.
How have households been affected by economic shifts?
Consumer confidence is near pandemic lows. Savings rates fell to 4%, the lowest since 2022. As a result, families face more financial stress.